The Untold Story on PBS – The High Health Care Costs of Poverty

On February 16th, PBS aired a documentary, “US Health Care: The Good News.” It’s a story about coordinated health care, and its message is simple and direct. Health care would be better and cheaper if high-cost cities, like New York, had systems of care that were as coordinated as in low-cost communities, like Grand Junction CO.

Most readers will recognize that this is not a new story. It was THE story during health care reform. Enthusiasm surrounding it led to provisions in the law supporting the creation of new structures, such as medical homes, accountable care organizations (ACOs) and value-based purchasing, which experts believe will reduce spending. Doctors will be paid for better outcomes, and hospitals will be penalized for excessive readmissions. Several private insurers have joined in adopting these strategies.

The Grand Junction story first emerged in a New Yorker article by Atul Gawande in 2009. Soon thereafter, President Obama paid a visit, and with roaring enthusiasm declared, “Hello, Grand Junction! You know that lowering costs is possible if you put in place smarter incentives; now you are getting better results while wasting less money.” The President thought he had found the gold to pay for reform. But it was fools gold. Quality efforts can take the edge off of costs, but the real cost-driver is the severity of illness, and that’s determined mainly by patients’ income and education. Poor people are sicker, and they cost more, especially when they live in ghettos full of other poor people who see no way out and whose children grow up never finding an exit.

Low-costs are not unique to Grand Junction. Costs are low in rural areas across the entire northern tier, a vast expanse that covers one-third of the nation but includes only 6% of the population and less than 1% of the black population. Poverty exists in this region, but except for a few Indian reservations, there are no poverty ghettos. So how does Grand Junction stack up against other communities in this region? It’s about average. And when adjustments are made for the severity of illness, costs in Grand Junction are very similar to those in poor communities in the Deep South.

I have cared for poor patients since I was an intern at the Boston City Hospital 50 years ago. But it was not until I was a medical dean in Milwaukee 30 years later that I studied poverty systematically. Two characteristics of Milwaukee drew me to the problem. First was its high degree of racial and economic segregation, which confines most who are poor, black or Latino to a narrow “poverty corridor.” And second was its high health care utilization, higher than elsewhere in the region and 30% higher than in Grand Junction. In trying to understand why, it became clear that the “poverty corridor” accounted for the difference. Without it, Milwaukee was like other communities in the region, including Grand Junction. Poverty made all of the difference.

Manhattan has proved to be much more complicated but no different. Its health care utilization is almost 50% greater in than in Grand Junction, but it is three times as great in Harlem, and without Harlem, Manhattan and Grand Junction are almost identical. As in Milwaukee, poverty made all of the difference. In fact, utilization is even lower than in Grand Junction in the largely-affluent area along Central Park and south to Greenwich Village. So, if the President wants a model for the nation, here it is. But, of course, that’s ridiculous. The reason for low utilization in there has nothing to do with care coordination and everything to due with the absence of poverty.

Nonetheless, viewers who watch the “Good News” story should be impressed that systems with better coordinated care are better and probably cheaper, possibly by as much as 10%, although a recent report from the Congressional Budget Office pegs that number lower. But the untold story is even more important. It’s that poverty, which is uncommon in Grand Junction, is a major breeding ground for poor health, and that poverty ghettos, like those in Milwaukee’s inner city and in Harlem, are cauldrons of high health care spending.

Unfortunately, providers and insurers know this already – they always have. They know that the poorest patients have the poorest outcomes and the most readmissions and that these patients cost double or triple. So the best way to save money and boost performance is to avoid caring for them. That’s what providers do when they relocate to the suburbs or create barriers to access or simply close their doors.

So the untold story is that there are immense social and economic consequences associated with the high health care costs of poverty. Addressing them will be painfully difficult, all the more so if they are not acknowledged and discussed. Solutions will require changes both within the health care system and in the social infrastructure beyond. But most of all, it will demand attention to the root causes of poverty. That’s why the untold story must be told.

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5 comments

I was in there in the audience when you made your point of view and feelings known during the screening. SES and health disparities continue to be unaddressed on a large scale in health care leaving patients and communities to suffer. Your comments had a profound impact and I’m glad for your post here.

Bravo for raising this point and putting the documentary in perspective. Interestingly, good coordinated care can work in impoverished areas, but it takes more time and resources. But the good news is that it could be a great job creator and allow neighbors educating neighbors to pull themselves out of poverty while lowering health care costs. That is the real missing ingredient in health care delivery – a robust community based care system, esp. in impoverished neighborhoods.

Walter Tsou has offered a good idea – poor communities have smart but not necessarily trained individuals who can provide needed services for others and save the system far more than they cost, while the system creates employment. This is exactly what Jack Geiger demonstrated in communities in the Mississippi Delta several decades ago. There are other good ideas, too, but none will surface if the problem of poverty is denied. Tell your friends at Dartmouth and the Commonwealth Fund that their efforts to achieve support for ACOs and Shared Decisionmaking should not be at the expense of finding solutions to the high health care costs of poverty.